“Thinner is better when it comes to laptops and cellphones. But now, according to a new Merrill Lynch study, that rule also applies to SEC filings and the stock performance of technology companies,” writes Ken Brown in today’s Wall Street Journal.

“The study, which also proves that there is more to stock analysis than inventory write-offs, goodwill amortization and operating cash flow, took a look at the annual 10-K filings that companies make to the Securities and Exchange Commission.”

“The conclusion: Less is more. Stocks of the companies with the briefest filings performed best on average and those with the biggest filings did the worst.”

” ‘Simple and clean kind of beats complicated and long,’ says Steve Milunovich, Merrill’s technology strategist.”

“Specifically, Merrill’s analysts looked at the 10-K filings, which detail earnings and other financial details, of 48 technology companies. Then they compared the size of the document with the companies’ stock performance over the past year.”

“In a generally dismal year for tech stocks, the companies with small filings lost an average of 52% from March 31, 2000, to this past March 31, compared with a 63% drop for the Nasdaq Composite Index. Midsize filings lost an average of 57%; large ones returned a negative 73% and jumbo ones lost 78%.”

“No one at Merrill claims this is anything more than food for thought. And no one is saying you should bet your retirement money on companies with short SEC filings. ‘What we did was not predictive, it’s more a coincident correlation, but it’s still pretty interesting,’ Mr. Milunovich says.”

“But there are some lessons from the study. Most long filings are full of footnotes that detail restructurings, write-offs, special charges and other signs of trouble at a company, and once a company begins along that path, the problems generally continue.”

“To find out the sizes of the documents, the Merrill analysts called up the filings on Edgar, a Web site that provides access to SEC filings. The site shows a document’s size in kilobytes (the amount of storage space they take up on a computer). Using this data, the analysts ranked the filings by size — small (below 300 kilobytes), medium, large and jumbo.”

“The winners of the brevity contest were Adobe Systems, whose 10-K filing came in at a slim 11 kilobytes as posted on Edgar, with Texas Instruments and Teradyne, in second and third, respectively. Their returns over the study period: minus 37%, minus 61% and minus 60%.”